The holidays were not kind to every retail store in America. Macy's retailers released a plan earlier this month highlighting cost-effective ways for the company to stay afloat after losing sales. The plan will help the company reduce SG&A expense by about $400 million, according to a press release on their company site. This will not take away from the investments the company has made in some of its "omnichannel capabilities" at Macy's and Bloomingdale's stores.
“In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations. Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity. We will continue to invest in strategic initiatives that anticipate emerging customer needs and create shareholder value,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc. “The cost efficiencies represent more than two-thirds of our goal of annual SG&A expense reduction of $500 million, net of growth initiatives, from previously planned levels by 2018. In some cases, there will be short-term pain as we tighten our belt and realign our resources. But our eye is on a long-term vision of Macy’s, Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace.”
Lundgreen goes on to describe the company's plan, which will reduce the number of existing Macy's stores to 47 local districts in five regions. The company originally boasted 58 districts in seven regions. Additionally, they will change their staffing levels to improve productivity and customer service.
Considering the bare bone staffing they had in their plethora of stores before, it may be a better move. Approximately 3,000 associates (employees) will be affected by the company-wide change, with only half of them being moved to other positions in the company.
The company also intends to cut its back-of-house and back-office tasks, either simplifying them or cutting them out altogether. This will mean only about 150 of the current 600 employees filling these positions will be reassigned, while the rest will be allowed to take part in the voluntary separation opportunity. This company opportunity is already being extended to approximately 165 senior associates in Macy's and Bloomingdale's central stores. Of course, associates who wish to take advantage of this opportunity must meet specific company-specified age and service requirements and be willing to leave the company in Spring 2016.
The company has listed that, of its 770 stores, 40 of them will be permanently closing their doors. Of those 40, 36 of them will close in Spring of this year, while the remaining four will close in the final quarters of 2015.
Macy's locations subject to closure will be holding final clearance sales running from January 11th for about 8 to 12 weeks. Clearance sales at Westfield Century City, North DeKalb Mall, and Rosenburg Valley Mall are already taking place.
Further information on store closures, real estate ventures, and financial impact can be found in the company's official press release.